STAKEHOLDER GOVERNANCE: SOLVING THE COLLECTIVE ACTION PROBLEMS IN JOINT VALUE CREATION

Capitalism works when actors are motivated to engage in joint value creation. Stakeholder theorists have long argued that this is most likely when firms "manage for stakeholders," but have only recently explicitly recognized that stakeholders engaged in joint value creation face collective action problems: situations in which stakeholders may be tempted to pursue their own interest at the expense of maximizing joint value creation. We build on the work of Elinor Ostrom on solving collective action problems to develop theory about how to govern joint value creation whenmanaging for stakeholders. Specifically, we useOstrom's design principles to contrast the hub-and-spoke formof governance central tomuch of the stakeholder literature with two alternative governance forms (lead role governance and shared governance) that we derive from Ostrom's work, and we discuss the comparative effectiveness of these three governance forms as depending on the nature of the joint value creation activities. Ourwork contributes to stakeholder theory as an integrative perspective on the role ofmanagement and governance in fostering cooperation inmodern capitalist systems, where joint value creation increasingly involves stakeholders outside the boundaries of the firmas traditionally understood.